13 November 2003 | David Arminas
Total outsourcing of all rail maintenance at Network Rail was always going to be fraught with problems, according to its recently departed director of supply chain.
Les Mosco, who left by mutual agreement at the end of October, told SM he had questioned the strategy when he arrived at Network Rail's predecessor, Railtrack, more than three years ago.
At the time of the privatisation of the rail network in 1994, six private contractors bought up the former British Rail maintenance teams and were contracted to run the programmes.
But late last month, Network Rail announced it was taking all of its maintenance contracts worth £1.3 billion back in-house.
Mosco told SM: "When I joined, I questioned whether this was the right outsourcing model because it was outsourcing in the extreme. This was not a criticism of Railtrack but the way that the rail system had been privatised.
"The step to bring them all in-house was a bold move that I don't disagree with, and it's a positive sign that Network Rail has the courage of its convictions."
Outsourcing suffers because there is no true competitive marketplace and only a few suppliers, said Mosco, a past CIPS president.
"The barriers to entry for companies were so large, they needed a lot of money to invest in equipment and people skills to run rail maintenance. There were seven rail maintenance companies and only Serco was a new entry."
Mosco said that maintenance, by its nature, makes it difficult to accurately specify what work has to be done.
"It is reactive with some work planned, some routine and some that is totally unexpected. This makes it very hard to fully specify requirements."
Measuring what work has been done has always been difficult, and it was only recently that key performance indicators could be implemented for better measurements of success, he added.
Mosco said he was disappointed to not be at Network Rail when new track renewal contracts, worth around £2 billion annually, start next April. But the highly mechanised renewals should save money, he added.
"I joined because of the chance to work at the UK's largest construction client with a huge purchasing and contracting budget, currently around £5.5 billion - which is bigger than most FTSE 100 companies - and to shape very complex supply chain relationships," he said.
"But the imminent reorganisation will make the supply chain director's job different to the one I had, and it is not the job I wanted."